Are we still talking about the effects of Brexit? I am afraid so.
At present there is no clear agreement on the recognition of insolvency proceedings and more generally, civil judgments, post-Brexit.
The Government has announced that it plans to implement the Model Law on Enterprise Group Insolvency ("MLEG") and the Model Law on Recognition and Enforcement of Insolvency Related Judgments in an attempt to fill this gap, but many commentators are already questioning the strength of the government's proposals.
If MLEG is adopted, the UK is likely to be the first country to adopt MLEG.
Although cooperation between jurisdictions is generally mutually beneficial for cross border insolvencies, MLEG is a voluntary framework and will only apply to the countries that adopt it. MLEG does not provide for automatic recognition in the same manner as European legislation so the scope of recognition and the relief available under MLEG is likely to vary from country to country. As such, the success of MLEG will largely depend on whether MLEG is adopted by other countries, in what form it is adopted and how it interacts with the existing body of case law on cross-border insolvencies.
So absent new legislation, where do we stand?
At present, there are two main routes for getting English insolvency proceedings recognised in other jurisdictions:
Via the existing model law, the UNCITRAL Model Law on Cross-Border Insolvency, in an adopting country; or
For any other country, via the private law of the country where recognition is sought.
These routes to recognition are not straightforward. They require you to carry out an analysis on a country by country basis. Advice from local lawyers will normally be required. These routes also generally require more time and resources to navigate because relief is discretionary and whether recognition is obtained will largely depend on the facts of the case. These additional hurdles are frustrating, but not an insurmountable problem.
If you require any assistance in identifying a route to recognition for English insolvency proceedings, please contact Rachel Brown (Senior Associate) in our Restructuring and Insolvency Team.
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